Wednesday

20th Jun 2018

Russia relaxes EU food ban, counts costs

  • (Photo: malyousif)

Russia has said its ban on EU food imports will cost it “hundreds of billions of rubles” in subsidies.

Its agriculture minister, Nikolai Fyodorov, told the Rossiya 24 broadcaster on Wednesday (20 August) the government has set aside 50 billion rubles (€1.03bn) for this year to keep shop shelves stocked with EU-type products.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

"We are trying to prove that it [the 50bn ruble subsidy] needs to be somewhat higher," he noted.

“The volume of additional support needed to substitute for the embargoed items in full – if we are talking about short-term, through the end of the year – is tens of billions of rubles”.

“But there are also medium-term measures: Next year and in the subsequent years, you could say that this sum will be measured in the hundreds of billions of rubles”.

Russia imposed the ban on selected EU food items on 6 August in retaliation for EU sanctions over the Ukraine conflict.

Also on Wednesday, its prime minister, Dmitry Medvedev, took a long list of products off the blacklist.

The decision, published by Russia's food authority, Rosselkhoznadzor, includes: trout and salmon hatchlings; potato and onion seeds; hybrid sugar maize and peas for planting; lactose-free dairy products; selected vitamins and flavour additives; protein concentrates; and selected food fibers and food additives.

The same day, its consumer protection agency, Rospotrebnadzor, in a highly publicised move, ordered McDonalds to close four restaurants over unspecificed food safety violations.

Both sides are currently counting the cost of the sanctions confrontation.

The European Commission has so far earmarked €155 million to help EU farmers keep prices stable.

Its spokesman, Roger Waite, told EUobserver the full cost of the Russia ban is likely to be “massively under €5 billion”. But a Belenux-based bank, ING, has estimated it will cost €6.7 billion and 130,000 jobs.

With the EU and US also targeting Russian banks and energy firms with a ban on long-term debt, the overall Russian cost is likely to be higher still.

Russia's Vedomosti newspaper last week reported that Rosneft, the country's top oil producer, has asked the government to buy 1.5 trillion rubles (€30bn) of its bonds so that it can make debt repayments.

On the food side, World Bank data says Russia is the seventh largest country in terms of arable land per capita.

The data also says its livestock production is growing, but there is a steep downward trend in crop output and an ever steeper trend in rural depopulation.

For his part, Dmitry Yuriev, Russia’s deputy agriculture minister, told the FT this week that new programmes to develop logistics and quality-control systems in reaction to the EU food ban will take several years to implement.

Citing a lack of refrigerated storage facilities, he said: “Up to half of the fruit production from small farms and 20 percent of industrial vegetable production [in Russia] just rots away".

Analysis

Can Europe afford a Russia trade war?

One trade expert has described the EU-Russia sanctions war as economic “mutually assured destruction”, but strategic considerations continue to trump financial problems for both sides.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Opinion

Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

News in Brief

  1. PES to announce 'spitzenkandidat' names in October
  2. Macedonian parliament ratifies name deal
  3. EU to hit US with import duties from Friday
  4. Commission: New on-road CO2 test would take years
  5. Juncker orders migration 'mini-summit' on Sunday
  6. Luxembourg gave illegal state aid to energy firm
  7. Negotiators lower finger printing age of refugees to six
  8. EU to lift its internal data storage barriers

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  3. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  4. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  5. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  6. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  7. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  8. Mission of China to the EUChina: Work Together for a Better Globalisation
  9. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  10. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  11. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  12. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network

Latest News

  1. How to get around the EU posted workers directive
  2. EU needs comprehensive 'sexuality education'
  3. Fate of EU refugee deal hangs in the balance
  4. Merkel, Macron in pre-summit pledge on migration, eurozone
  5. Hungary to push ahead with 'Stop Soros' law on NGOs
  6. Swedish party puts EU referendums back in fashion
  7. EU summit set to outsource asylum
  8. Dutch request to clarify Brexit Britons' rights annulled

Join EUobserver

Support quality EU news

Join us